Code

Specify the code of the FX product.

Description

Enter a small description for the product.

Type

The first attribute that you define for a product is its type. Products can be broadly classified into two types in the Foreign Exchange module of Oracle Banking Treasury Management - Spot and Forward. For example, you want to create a product for GBP/USD spot (buy) deals called Buy GBP. When you define the product, you would indicate that the product type of this product is Spot. Any number of products can be created under each product type

Slogan

Enter a slogan for the product.

Group

Select the group to which the product belongs.

Start Date

Select the date from which the product is effective.

End Date

Select the date till which the product can be used.

Remarks

Enter any additional remarks about the product.

Product Code

The product for which you are maintaining preferences is defaulted here.

Description

The description of the product is displayed here.

Option Date Allowed

For a product, you can indicate whether an Option Date is specified for forwarding deals during deal processing. If you specify an option date, then you can change the contract value date to any date between the option date and the original value date, This means that the contract may be liquidated anytime between the option date and the value date of the contract.

To allow an option date, Select this check box. However, if you are allowed an option date for a product, you need not necessarily enter an option date during deal processing.

Max Tenor (In Months)

When you create a product, you can specify the maximum tenor for forward deals involving the product. You cannot enter a deal with a tenor that exceeds that defined for the related product. However, you can enter an FX deal with a tenor that is less than that specified for the product.

To specify the maximum allowed tenor for a product, enter an absolute value (in months) in the Max Tenor field.

Indicating the Contract Details to be Rekeyed

All contracts entered in the system should be ratified or authorized by a user with the requisite rights. This is a security feature.

When creating a product, you can indicate if the authorizer of contracts involving the product needs to re-key essential contract details. This is to ensure that the contract is not mechanically authorized. If you opt for re-key of details, click on the button against Yes under Rekey required field.

Rekey Required

Select Yes if you want to rekey the details, else select No.

Selecting Fields for Rekey

The following entries specify the rekey

Counterparty

Check this box to rekey the counterparty if needed.

Deal Currency

Check this box to rekey the deal currency details if needed.

Deal Amount

Check this box to rekey the deal amount details if needed.

Value Date

Check this box if you want the Value date details to be rekeyed if needed.

Exchange Rate

Check this box if you want the exchange rate details to be rekeyed.

You can specify any or all of the above details for rekey.

Under Rekey Fields you can indicate which of the details that you would like the authorizer to rekey. Click on the box adjacent to each contract detail to indicate that it should be rekeyed.

Input Mode

Specify the mode through which product can be used to book contracts

•Input Only - Product is used only from front end Oracle Banking Trea­sury Management.

•Upload Only: Use the Product during upload of FX contract only.

•Input and Upload: Product used both in case of Manual input through Oracle Banking Treasury Management as well as through upload.

Tenor Type

System calculates the tenor of FX contracts as follows:.

•Fixed: Bought value date – booking date

•Rolling: Bought value date – Branch date

Method

If you have opted to revalue the foreign currency liability for a product, you must also specify the revaluation method by which the profit or loss is to be calculated. You can revalue the profit or loss in different ways. They are:

•NPV (Net Present Value)

•Rebate

•Straight Line

•Discounted Straight Line

Confirmation

Event Wise Confirmation

Check this box to move the confirmation status of FX deal to Unconfirmed during amendment/cancellation/reverse/rollover, if outgoing confirmation message is configured for the event.

Payment on Confirmation

Check this field for the External Payment System to send the payment messages.

Holiday Check Required

Currency

Select this check box, to execute the currency holiday calender validation of the dates.

Financial Center

Select this check box, to execute the financial center holiday calender validation of the dates.

Local Holiday

Select this check box, to execute the local holiday calendar validation of the dates.

Non- Deliverable Forward Details

A Non-Deliverable Forward (NDF) is an outright forward or futures contract in which counter parties settle the difference between the contracted NDF price or rate and the prevailing spot price or rate on an agreed notional amount.

The NDFs have a fixing date and a settlement date. The fixing date is the date at which the difference between the prevailing market exchange rate and the agreed upon exchange rate is calculated. The settlement date is the date by which the payment of the difference is due to the party receiving the payment.

Oracle Banking Treasury Management supports NDF functionality for FX contracts. The settlement for the NDF forward contract will be for NDF net settlement amount in the settlement currency, which is the difference between the settlement amount exchanged and the amount at the fixing rate. Provide the fixing rate on fixing the date.

Oracle Banking Treasury Management supports the NDF forward contract using a “Two deal approach”. In this approach two contracts are initiated manually, they are:

•First deal (NDF Forward Contract) is a forward deal between the settle­ment currency and the NDF currency.

•Second deal (NDF Fixing Contract) will be a spot deal which is used as a fixing deal for the NDF deal.

note: Initiate NDF Fixing Contract manually.

The fixing date for the NDF Forward Contract is the settlement days for the settlement currency before the maturity date of the NDF Forward Contract. For both the contracts (NDF Forward Contract and NDF fixing contract) the NDF currency amount is the same, only the settlement currency amount changes depending on the exchange rate at the day of booking NDF forward contract and NDF fixing contract

NDF Indicator

Check this field to indicate whether the product is an NDF product or not. By default, this field is not checked.

For forward product type, if the NDF indicator is checked, then the product is for NDF Forward Contract. For spot product type, if the NDF indicator is checked then the product is for NDF Fixing Contract.

Default NDF Currency

Specify the Default NDF Currency from the option list. This field is activated when the NDF indicator is checked. The option list for this field will be list of all BOT and SOLD currency allowed for the branch.

NDF Basis

Specify the NDF Basis from the option list. This field is enabled if the NDF indicator is checked. NDF basis is used to generate the NDF advices for the NDF Forward contract.

Product Restriction

Branch List

Indicate whether you want to create a list of allowed branches or disallowed branches by selecting one of the following options:

•Allowed

•Disallowed

Currency Restrictions

Indicate whether you want to create a list of allowed currencies or disallowed currencies by selecting one of the following options:

•Allowed

•Disallowed

Categories List

Indicate whether you want to create a list of allowed customers or disallowed customers by choosing one of the following options:

•Allowed

•Disallowed

Pricing Details

External charge

Check this box to indicate that external charges are fetched from external pricing and billing engine for contracts created under this product.

External Charge is enabled only when the system integrates with external pricing and billing engine (PRICING_INTEGRATION = Y at CSTB_PARAM level).

Revaluation

•Yes: Choose Yes, to allow revaluation of deals involving the product.

•No: Choose No to disallow revaluation of deals involving the product.

Frequency

If you allow revaluation of your foreign currency liabilities for a product, all deals involving the product will be revalued regularly. Opt to revalue deals related to a product:

•Daily: To revalue deals daily click the button adjacent to Daily in the Frequency field.

•Monthly: To revalue deals on a monthly basis, click the button adjacent to Monthly in the Frequency field.

note: Spot contracts can only be revalued on a daily basis. Revaluation frequency as 'Monthly' is not allowed for Spot contracts 

When you run the End of Day processes in your bank, deals involving products specified for daily revaluation will be revalued. In case of products specified for monthly revaluation the deals involving the products will be revalued during the End of Month processes. Typically, the End of Day operator would perform the revaluation process.

On Booking an FX deal

If it is an LCY-FCY deal, take the discounted amount of the LCY leg as the LCY Equivalent of contract.

note: System passes Contingent booking entries for the discounted amounts.

Revaluation

Interest in both the currencies is accrued separately on a daily basis, starting from the spot date till the maturity date of the contract. The local currency equivalent of the FCY accrual entries is calculated at prevailing rates. Also the previous FCY accrual entries are revalued when you run the account revaluation batch function as part of the EOD operations. Contract level revaluation of the Discounted Amounts (Contingent Amounts) is done starting from the booking date till maturity of the contract.

These revaluations may result in a profit or a loss for your bank on the contract.

The revaluation entries are passed depending on the frequency you specify.

On the maturity date, the contingent entries are reversed; settlement entries are passed into the Nostro accounts for the full deal amounts and the interest receivable and the interest payable are booked into the FX gain/loss GLs.

You can indicate the method of revaluation by clicking on the button against the respective

methods.

Revaluation method for Spot Contracts

None of the above-mentioned revaluation methods are available for Spot FX contracts. The revaluation of Spot FX contracts simply involves marking them to market.

Auto Liquidation Allowed

You can liquidate Foreign exchange deals automatically or manually. In the Product Preferences screen, indicate whether the mode of liquidation of deals, involving a product, is Manual Automatic.

If you specify the automatic mode of liquidation, deals involving the product will liquidate automatically on the Settlement Date during the Beginning of Day processing (by the Automatic Contract Update function).

If you do not specify auto liquidation for a product, you have to give specific instructions for liquidation, through the Manual Liquidation screen, on the day you want to liquidate a deal.

note: If the Value Date of a deal is a holiday, the deal will be liquidated depending on your specifications in the Branch Parameters table. In this table.

If you have specified that processing has to be done on the last working day (before the holiday), for automatic events, the deal falling on the holiday will be liquidated during the End of Day processing on the last working day before the holiday.

If you have specified that processing has to be done only on the system date, for automatic events, the deal falling on a holiday will be processed on the next working day after the holiday, during Beginning of Day processing.

Brokerage Allowed

You may opt to allow or disallow brokers while creating a product. If you allow brokers for a product, you can enter into deals that may or may not involve brokers. If you disallow brokers, you cannot enter deals involving brokers, for the product.

To allow brokers, Choose 'Yes' by clicking on the button against it.

To disallow brokers choose 'No' by clicking on the button against it.

When a deal involving a broker is processed, the brokerage applicable to the broker will be picked up from the Brokerage Rules table.

Cross Currency Deals Allowed

If a deal involves currencies other than the local currency, it is referred to as a cross-currency deal. For a product that you create, you can opt to allow or disallow cross-currency deals.

If you opt to disallow cross-currency deals for a product, you cannot enter a deal that does not involve the local currency.

If you opt to allow cross-currency deals, you can enter a deal involving or not involving the local currency.

To allow cross currency deals, choose 'Yes' by clicking on the button against it. To disallow cross currency deals choose 'No' by clicking on the button against it.

Rollover Allowed

Specify whether foreign exchange deals, involving the product that you are defining, can rolled over into a new deal if it is not liquidated on its Value Date. If you specify that rollover is allowed for the product, it will apply to all the deals involving the product. However, at the time of processing a specific deal involving the product, you can choose not to rollover the deal.

If you specify that rollover is not allowed for a product, you cannot rollover a deal involving the product.

When a contract is rolled over, the terms of the original contract will apply to the new contract. If you want to change the terms of a rolled over contract do so during contract processing.

note: The rolled over contract will retain the reference number of the original contract.

Split Value Dates Allowed

For a product, you can indicate whether the Value Date (settlement date) of the Bought and Sold legs of FX deals, linked to the product, can be different.

If you select Yes, you can specify different value dates for the Bought and the Sold legs of the contract during deal processing. However, the enter deals with the same Value Date for the product.

If you select No, the Value Date (settlement date) should be the same for both legs of the deal.

Extension Allowed

Choose to allow extension of the Value Date of FX deals involving a product.

If you disallow the extension of value dates for a product, you cannot extend the Value Date of deals involving the product.

Local Holiday Check

After you have specified all your preferences on this screen, click Yes to store them in the system. Click No, if you do not want to save your preferences in the system.

Product Combination Code

In this field, you should specify the code by which the product combination is identified in the system. If you are defining a new product combination, enter a new code in this field. You can define a product that is a combination of two different products.

Description

Enter a description for the product.

Start Date

You can create a product such that it can only be used over a particular period. The starting date for this period should be specified in this field. The system defaults to today's date. Enter a date that is the same as, or later than, today's date.

End Date

You can create a product such that it can only be used over a particular period. The End Date of this period is specified in this field.

Number of Legs

This field identifies the number of contract legs that can be defined under this product combination. The system defaults to a value of two legs. This cannot be changed.

Slogan

This is the marketing punch line for the product. The slogan entered here is printed on the mail advices that is sent to the counter-parties who are involved in deals involving the product.

Product Code 1

If the product is a combination of two other products, each leg of the deal corresponds to one product in the combination. Specify which product corresponds to which leg in the ‘Product Combination’ screen. For deals involving such a product, select the product for the first leg of the deal.

Product Code 2

Select the product for the second leg of the deal.

Single Swap Advice Required

Even if you have specified swap advice for both products in a combination, generate single swap advice by choosing this option.

Product Category

You need to specify the Product Category for internal swap transactions.

Product Category Description

Enter a small description for the Product Category.

Foreign Exchange Spot Product

You need to specify the FX Spot Product for internal swap transactions.

Foreign Exchange Spot Product Description

Enter a small description for the Foreign Exchange Spot Product.

Foreign Exchange Forward Product

You need to specify the FX Forward Product for internal swap transactions.

Foreign Exchange Forward Product Description

Enter a small description for the Foreign Exchange Forward Product.

Foreign Exchange Forward Interest Product

You need to specify the FX Forward Interest Product for internal swap transactions.

Foreign Exchange Forward Interest Product Description

Enter a small description for the Foreign Exchange Forward Interest Product.

Money Market Borrow Product

You need to specify the MM product for Borrowing for internal swap transactions.

Money Market Borrow Product Description

Enter a small description for the Money Market Borrow Product.

Money Market Placement Product

You need to specify the MM Placement product for internal swap transactions.

Money Market Placement Product Description

Enter a small description for the Money Market Placement Product